Rental housing economist, Dad x5 and suffering Cowboys fan ... Rental housing is essential, misunderstood and we need more of it.
Dallas, Texas
Joined September 2008
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*UPDATED* (and still true)
When you build "luxury" new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points -- even in the lowest-priced Class C rentals. Here's evidence of that happening right now:
There are 21 U.S. markets where Class C rents are falling at least 4% YoY. What is the common denominator? You guessed it: Supply. Of those, all but one have supply expansion rates ABOVE the U.S. average.
There's no demand issue in any of these 12 markets. They're all among the absorption leaders nationally -- places like Austin, Phoenix, Salt Lake City, Raleigh/Durham, Atlanta, Tampa, Dallas, Charlotte, Orlando, etc. But they all have a lot of new supply.
Simply put: Supply is doing what it's supposed to do when we build A LOT of apartments. It's a process academics call "filtering." New pricey apartments are pulling up higher-income renters out of moderately priced Class B units, which in turn cut rents to lure Class C renters, and on down the line it goes.
Less anyone still in doubt, here's another factoid: Where are Class C rents growing most? You guessed it (I hope!) -- in markets with little new supply. Class C rent growth topped 4% in 22 of the nation's 150 largest metro areas, and nearly all of them have limited new apartment supply.
Most new construction tends to be Class A "luxury" because that's what pencils out due to high cost of everything from land to labor to materials to impact fees to insurance to taxes, etc.
So critics will say: "We don't need more luxury apartments!"
Yes, you do. Because when you build "luxury" apartments at scale, you will put downward pressure on rents at all price points.
Spread the word.
All the would-be investors searching for bargain-priced apartments after reading today's WSJ:
The WSJ tackles the apartment debt topic... While it's taken longer than expected for distress to emerge, more is emerging, and it's particularly concentrated in certain types of assets -- value-add deals bought at the cycle's peak.
When mortgage rates jumped in 2023-24, lots of housing experts (not me!) said rents would spike -- especially for single-family rentals.
They were spectacularly wrong.
Year-to-date, SFR rents are growing at the slowest pace in 14 years.
D.C. watched St. Paul NIMBYs shut down apartment construction with a rent control ballot measure, and says, "hmm, the only problem with St. Paul's 3% rent cap was that it was too high."
It is hard to get capital for new apartment construction these days, even in supply-constrained areas.
And even harder in cities like D.C. that play bait-and-switch games of "embrace development, then demonize the owner once construction completes."
Your monthly PSA: Never trust the Census for multifamily starts data. Garbage.
Starts have been down for 2+ years, but Census will have you believe it's been bouncing around like a pinball.
Jay Parsons retweeted
🏡 Key Insights on the Housing Market & SFR Sector from Dallas Tanner of Invitation Homes
In a recent interview with @jayparsons on @RentRollPodcast, Dallas Tanner, President & CEO of $INVH Invitation Homes, shared a detailed look into single-family rental (SFR) dynamics, supply trends, capital deployment, and the political landscape surrounding institutional housing.
💵 The $1,000/Month Rent vs. Own Gap
* The current affordability gap remains wide—renting an Invitation Homes property saves residents roughly $1,000 per month (or ~$12,000/year) compared to the cost of buying and owning a home in the same markets.
* Because buying remains out of reach for many, resident retention is near record highs—average resident tenure is pushing close to 4 years (even higher on the West Coast), with an 80% renewal rate.
* Traditionally, 24–25% of departing residents moved out to purchase a home; today, that figure has dropped to 17–18%.
🏗️ Build-to-Rent (BTR) & Builder Partnerships
* Purpose-built rental communities allow institutional platforms to offer curated amenities, unified yard maintenance, and fresh community design that scattered-site acquisitions cannot replicate.
* Invitation Homes has provided nearly $300 million in loans to small and regional developers, acting as a capital partner, GC, or property manager.
* Rather than buying existing homes one-by-one as in 2012, the industry focus today is on building new housing stock directly into high-demand markets.
⚖️ Addressing Policy & Political Narratives
* Tanner noted that broader economic inflation (gas, property taxes, homeowners insurance) has led policymakers to seek a scapegoat, despite institutional owners managing only 2% to 3% of the nation's total rental housing.
* Invitation Homes actively engages with regulators and elected officials on both sides of the aisle to advocate for supply-focused housing solutions.
* High customer satisfaction and professional asset management help raise overall service quality across the single-family rental space.
📈 Macro Market Outlook & Consumer Preferences
* Annualized housing sales sit around 4.0–4.25 million units, well below normal levels of 5.0–5.5 million, due to elevated mortgage rates locking up inventory.
* Younger demographics increasingly prioritize geographic mobility and optionality over early homeownership.
* Future growth will favor flexible models—such as rent-to-own programs and leases with purchase options—creating a more dynamic housing ecosystem.
youtube.com/watch?v=G72PfCXo…
Jay Parsons retweeted
San Francisco banned algorithmic pricing software beginning in October 2024. Since then, rents for one bedrooms apartment have risen by about $1,200 a month, to $4,250.
This suggests that high housing demand and limited supply, not algorithms, are driving price increases.
No ethical landlord calls a competitor to agree on rent. With algorithmic collusion, they don’t have to. eastbaytimes.com/2026/09/16/…
If this were apartments instead of cities, they'd call this "junk fees" fueled by greed, and insist all these services should be covered by base rent (or taxes in this case).
Mortgage rates now top 7%, but don't bank on that driving up rental demand and rents.
Historically, rents pop more when homes are selling. A rising tide boosts all ships.
Rents may still rebound in 2027, but it'll be primarily because of rapidly declining new supply (coming off generational highs for apartments and build-to-rent SFR). Slow home sales would be a contributing factor, but not the dominant one.
Remember all the headlines in 2023-24 saying rents would pop because mortgage rates were going up? It didn't happen then. Rents did the opposite. Weak home sales reduce economic growth and household formation.
Conversely, the best years for apartment/SFR owners were during periods of strong home sales.
Every rental housing investor should be cheering for a stronger for-sale housing market.
Good graphic from Adam Couch that highlights the "flight to quality" phenomenon among apartment renters.
In this case, it's a high-rent, high-supply suburban pocket of Dallas.
Yet it has a) higher occupancy and b) fewer rent concessions because it's a place people want to be.
Up and to the right. That's what we are now seeing for apartment rents in previously high-supplied markets like Boise (remember when it was branded oversupplied and left for dead??), Wilmington, Charleston, Myrtle Beach and even Austin.
Could these be bellwethers for other high-supplied markets in Sun Belt and Mountains as supply plunges? We'll see.
Others to watch: Salt Lake City, Tucson, Tampa, SW Florida, Jacksonville, and Phoenix's east side (Scottsdale etc), as well as many Sun Belt downtowns, where supply dropping off faster than suburbs.
Fwiw, I don't think the +8% in Boise is something we'll see in most other spots. Some markets are just more volatile, and volatility swings both ways. But could plausibly see more Sun Belt/Mountain markets in mid single-digits next year.
